The High Court dismissed an appeal by a taxpayer against the decision of a special commissioner ((2005) Sp C 459) upholding the imposition of a penalty for failing to produce certain specified information in connection with his tax return where its imposition was not contrary to his human rights.

Facts

The taxpayer appealed against a fixed penalty of £50 under TMA 1970, s. 97AA(1)(a) for failing to produce documents and information specified in a notice under s. 19A.

An Inland Revenue officer gave notice of an enquiry into the taxpayer's 2001 tax return and a notice was issued under s. 19A. The taxpayer did not appeal against the notice and did not comply with it. On 24 March 2003 the Revenue appropriated £50 of a payment of £654.21 in satisfaction of the penalty. The taxpayer appealed arguing that the imposition of the penalty and other matters connected therewith were in breach of his rights under the European Convention on Human Rights (‘ECHR’). He contended that the enquiry, the imposition of the penalty and the threat of further penalties of £150 a day (under s. 97AA(1)(b) and (2)) involved criminal charges within art. 6(1) of the Convention and that his inability to obtain Criminal Defence Service funding for professional representation was a breach of his rights under art. 6. The special commissioner dismissed the taxpayer's appeal on the basis, inter alia, that the £50 penalty was not a criminal charge under art. 6 and that his inability to secure professional representation was irrelevant. Furthermore, there was no evidence that the Revenue had contemplated any prosecution or penalty involving a criminal charge ((2005) Sp C 459).

The taxpayer appealed to the High Court contending that the commissioner had erred in law.

Issue

Whether the imposition of the penalty was in breach of the taxpayer's human rights under the European Convention on Human Rights.

Decision

Etherton J (dismissing the appeal) said that the commissioner was right to find that the penalty was not a criminal charge under ECHR, art. 6 and there was no scope for arguing that there had been any violation of the taxpayer's privilege against self-incrimination.

The domestic classification of a fixed penalty imposed under s. 97AA(1)(a), which had to be distinguished from the heavier penalties under s. 97AA(1)(b) and (2), was under civil law but that was only a starting point and not decisive. Other factors to be taken into account in deciding whether a charge was criminal in character were the nature of the offence and the nature and degree of the severity of the penalty that could be imposed. The commissioner had taken those factors into consideration and was entitled to reach the conclusion he had.

The possibility of daily penalties in the future under s. 97AA(1)(b) could not affect the classification of the fixed penalty under s. 97AA(1)(a). Although there was an element of punishment in the modest fixed penalty, its primary function was to secure documents for the Revenue (Engel & Ors v Netherlands (No. 1) (1976) EHHR 647 and Han and Yau v C & E Commrs [2001] BTC 5,328 considered).

Chancery Division. Judgment delivered 9 February 2006.